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China's 'land grab' takes 5 per cent of Ukraine: report

A farmer works on a dried field in Wuhan in China's Hubei Province. China plans to lease 9 per cent of Ukraine's arable land to help feed its population. Photo: Getty

Ukraine has agreed a deal with a Chinese company to lease 5 per cent of its land to feed China's burgeoning population, according to reports.

It would be the biggest so-called "land grab" agreement, where one country leases or sells land to another, in a trend that has been compared with the 19th century "scramble for Africa", but which is now spreading to eastern Europe.

Under the 50-year plan, China would eventually control 3 million hectares, an area equivalent to the size of Belgium or Massachusetts, which represents 9 per cent of Ukraine's arable land.

Initially, 100,000 hectares would be leased. The farmland in the eastern Dnipropetrovsk region would be cultivated principally for growing crops and raising pigs. The produce would be sold at preferential prices to Chinese state-owned conglomerates, said the Xinjiang Production and Construction Corp (XPCC), a quasi-military organisation also known as Bingtuan.

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XPCC said it signed the £1.7-billion ($2.9 billion) agreement in June with KSG Agro, Ukraine's leading agricultural company.

But KSG Agro denied reports that it had sold land to the Chinese, saying it had reached agreement for the Chinese only to modernise 3000 hectares and "may in the future gradually expand to cover more areas".

Any sort of "land-grab" deal can be sensitive politically. Madagascar was forced to scrap a plan to lease 1 million hectares to South Korea in 2009 after protests against "neo-colonialism". The Philippines has also blocked a China deal.

"This reminds us of a colonial process even when there is no colonial link between the two countries involved," said Christina Plank, the co-author of a report by the Transnational Institute on "land-grabbing".

With its population of 1.36 billion predicted by the UN to rise to 1.4 billion by 2050, China is among the leading renters of overseas farmland in Africa, South America and south-east Asia, although the XPCC deal would make Ukraine China's largest overseas farming centre. China consumes about 20 per cent of the world's food supplies, but is home to just 9 per cent of the world's farmland, due in part to rapid industrialisation.

"As urbanisation speeds up, consumption has led to greater food demand and domestic grain prices have stayed above global prices," Ding Li, a senior researcher in agriculture at Anbound Consulting in Beijing, told the South China Morning Post. "Therefore, China has been importing more and more grain."

Apart from China, India, South Korea, the Gulf states and western European corporations began taking tracts of land, especially in Africa, after global food prices spiked in 2008.

XPCC however is making the first such major foray into continental Europe. It has a country that was known as the "bread basket as the Soviet Union" but that has progressed slowly since the fall of the Iron Curtain. "The special thing about Ukraine is that there is so much land and so much food left, so there is not a danger of shortage. They already export a lot of grain that they cannot consume on their own," said Ms Plank.

But campaigners are concerned about major deals pushing smaller farmers off the land, causing unemployment and blocking long-term rural development.

The Dnipropetrovsk transaction comes with considerable side benefits for the region. The Chinese company said it would help build a motorway in the Crimea and a bridge across the Strait of Kerch to connect the Crimea with the Taman peninsula in Russia.